Arnott International has a bond outstanding that is currently trading at a market price of $1,200. The bond has an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bond's indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, the bond may be called at 109% of face value (call price = $1,090); but in each of the next 4 years, the call premium will decline by 1 percentage point. Thus, in Year 6 the bond may be called at 108% of face value, in Year 7 the bond may be called at 107% of face value, and so on. QUESTIONS 1. What is the yield to maturity (YTM) on the bond? [3 marks] 2. What is the bond's yield to call (YTC) if it is called at the end of year 5? [3 marks] 3. If you bought this bond today, do you think you would be more likely to earn the YTM or the YTC? Why? [3 marks] 4. If the interest rates remain at their current level in future years, when is the latest that investors might expect the company to call the bond? [5 marks)